By Yifan Wang 
 

Standard Chartered PLC's second-quarter pretax underlying profit slumped 40% from a year earlier, as credit impairments continued to surge amid the prolonged coronavirus pandemic.

Underlying profit before tax fell to $733 million, compared with $1.23 billion a year earlier, the Asia-focused lender said Thursday.

The decline was primarily due to a surge in credit impairments, which jumped to $611 million from $176 million. The increase followed an even-sharper increase in impairments in the first quarter.

Operating income fell 4.2% to $3.72 billion.

Net interest income plunged 15% to $1.66 billion, mainly dragged by margin compression. Net interest margin was 1.28%, down 0.39 percentage point from the same period in 2019.

For the second half, Standard Chartered expects income to decline both sequentially and from the prior year, as some countries' economic recoveries are unlikely to offset the negative impact of low interest rates globally.

However, the lender believes credit impairments for the coming months may come down from the first half-year, if economic conditions in its markets do not materially deteriorate.

The bank added that it has extended its cost-control initiative into 2021.

Standard Chartered had earlier canceled this year's interim dividend and warned that the public health crisis could derail its previous target to achieve at least 10% return on tangible equity by 2021.

 

Write to Yifan Wang at yifan.wang@wsj.com

 

(END) Dow Jones Newswires

July 30, 2020 01:03 ET (05:03 GMT)

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